VAT: Lagos holds public hearing, poised to executive judgement

Governor Babajide Sanwo-Olu

Lagos state government, Wednesday, said it is poised to execute judgement granting states the power to collect Value Added Tax (VAT), saying no booby trap will affect its implementation.

This was the position of the state Attorney-General and Commissioner for Justice, Mr Moyosere Onigbanjo (SAN) during a public hearing at the state House of Assembly on “A Bill for law to impose and charge value Added Tax on certain goods and services provided for the administration of the tax and other Related Matters.”

Onigbanjo was responding to a representative of civil society organisations, Mr Adeola Samuel, who cautioned the state government over the execution of the judgment in favour of Rivers state.

A Federal High Court in Rivers state, presided over by Justice Stephen Dalyop Pam, had issued an order of perpetual injunction restraining the Federal Inland Revenue Service (FIRS) and the Attorney General of the Federation, both first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers state to pay to FIRS, personnel income tax and Value Added Tax.

Justice Pam made the assertion while delivering judgement in suit No. FHC/PH/CS/149/2020, filed by the Attorney General for Rivers State (plaintiff), against the Federal Inland Revenue Service (first defendant) and the Attorney General of the Federation (second defendant).

The court, which granted all the 11 reliefs sought by the Rivers state government, stated that there is no constitutional basis for the FIRS to demand for and collect VAT, Withholding Tax, Education Tax and Technology levy in Rivers state or any other state of the Federation, being that the constitutional powers and competence of the federal government is limited to taxation of incomes, profits and capital gains which does not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the Constitution.

The judge dismissed the preliminary objections filed by the defendants that the court lacks jurisdiction to hear the suit and that the case should be transferred to Court of Appeal for interpretation.

Justice Pam, who also dismissed objection raised by the defendants that the National Assembly ought to have been made a party in the suit, declared that the issues of taxes raised by the state government are issues of law that the court is constitutionally empowered to entertain.

He declared that after a diligent review of the issues raised by both the plaintiff and the defendants, the plaintiff has proven beyond doubt that it is entitled to all the eleven reliefs it sought in the suit.

The court agreed with the Rivers State Government that it is the State and not FIRS that is constitutionally entitled to impose taxes enforceable or collectable in its territory of the nature of consumption or sales tax, VAT, education and other taxes or levies, other than the taxes and duties specifically reserved for the Federal Government by items 58 and 59 of Part 1 of the Second Schedule of the 1999 constitution as amended.

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